Saturday, July 12, 2014

We all pay for $1,000 a pill drug

We all pay for $1,000 a pill drug

By Karen Ignagni

July 7, 2014 -- Updated 1309 GMT

Editor's note: Karen Ignagni is president and CEO of America's Health Insurance Plans,
a trade group for the health insurance industry. She directed the
AFL-CIO's Department of Employee Benefits and was a professional staff
member on the U.S. Senate Labor and Human Resources Committee and worked
at the U.S. Department of Health and Human Services. The opinions
expressed in this commentary are solely those of the author.

(CNN) -- Health care experts recently gathered at
the Centers for Disease Control and Prevention in Atlanta to discuss the
public health crisis of hepatitis C, which is ravaging communities
across America, and the budding hope that we may soon be able to
eliminate it with a prescription medicine called Sovaldi.

Hepatitis C, a chronic, potentially fatal liver disease, afflicts more than 3 million Americans.
Solving the hepatitis C epidemic is a goal we should all embrace, which
is why health plans are hard at work identifying at-risk patients so
they can be screened and receive necessary treatment.

Karen Ignagni

Sovaldi, the brand name for sofosbuvir, holds remarkable promise. But the manufacturer of this drug, Gilead Sciences, has created an enormous obstacle that is straining our health care system: its eye-popping price.

At $1,000 per pill,
Sovaldi costs $84,000 for a single course of treatment, and well over
$100,000 when combined with other medications, as is generally the case.
If every person with hepatitis C were treated with Sovaldi alone at
this price, the cost would be more than $268 billion. For some
perspective, consider that in 2012, the United States spent $263 billion for all prescription drugs.

This pricing, which Gilead attempts to justify as the cost of medical advancement,
will have a tsunami effect across our entire health care system.
Because the cost of health insurance is fundamentally a reflection of
the price of health care services, the excessive price of Sovaldi
unavoidably puts upward pressure on premiums for everyone with private
coverage. It will also strain state Medicaid and Department of Veterans
Affairs programs.

A recent analysis found that senior citizens on Medicare Part D
could see premiums as much as 8% higher next year because of the price
of this one drug. And it's been projected that California's Medicaid
spending on Sovaldi and the accompanying drugs could potentially outpace
what the state spends in a year on K-12 and secondary education
combined.

High-priced drugs are not a new phenomenon. Drug makers have long used monopolies to inflate prices. But the trend with so-called specialty drugs is a game changer. Startling as the price of Sovaldi is, it's just the canary in the coal mine.

This pricing will have a tsunami effect across our entire health care system.

Karen Ignagni

Until now, policymakers
and stakeholders have looked the other way as specialty drug prices have
gone higher and higher. In fact, any discussion of price has been
quashed as an assault on innovation.

But asking for a blank
check in the name of innovation won't work anymore. Not when it stands
in the way of solving a public health crisis. Not when it threatens
state Medicaid budgets and the success of Medicare Part D, and not when
the pricing threatens the very innovation that is giving so many hope.

We cannot have
sustainable medical innovation in America without prices that the health
care system can sustain. Just think, could we have eradicated polio or
smallpox if the treatments were priced like hepatitis C?

Today's public health
challenge is to find a balance that rewards research and development and
brings breakthroughs to patients, without upending family budgets,
employer benefit systems and crucial public programs. That's going to
require an end to the sky's-the-limit pricing that threatens the
progress we all want.

Now is the time for stakeholders to begin the process of working together to meet this challenge.